US Stocks Climb As Energy Rallies, Home Sales Boost

KristinaPeterson

NEW YORK (MarketWatch) -- U.S. stocks climbed Wednesday as the energy sector rallied and strengthening home sales helped boost sentiment.

The Dow Jones Industrial Average rose 113 points, or 1.10%, to 10137, with all of its components in the black. Walt Disney led the measure's gains, lifted by comments from Chief Executive Robert Iger who said at an investor conference that it's too early to discount the ability of media companies to drive revenue from emerging new media platforms.

Hewlett-Packard rose 1.7% after the company received antitrust approval to acquire Palm. Palm, which isn't a Dow component, edged up 0.5%.

The Dow's other top gainers Wednesday included Alcoa, which climbed 0.7% and Caterpillar, which rose 1.1%. Both stocks fell Tuesday on investors' worried about how the companies could be impacted by China's efforts to slow its growth and economic struggles in the euro zone.

The Nasdaq Composite climbed 1.3%. The Standard & Poor's 500-stock index rose 1.3%, with all its sectors in the black, led by the energy and materials sectors. The energy sector's gains came as crude-oil futures rose above $73 a barrel.

American depositary shares of BP rebounded 3%, erasing part of its Tuesday tumble, which had come as the U.S. Justice Department opened a criminal investigation into the catastrophic oil spill in the Gulf of Mexico. Among other energy stocks that bounced back from Tuesday's sharp declines, Halliburton jumped 9%, Smith International rose 7.2% and Schlumberger rose 6.7%.

Investors said while the investigations cast a shadow on the companies in focus, other stocks may have fallen to attractive prices.

"There's no doubt that the short-term prospects there are cloudy at best, but again there's some particular sectors [within energy] that would be less affected," said Jim Dunigan, managing executive of investments at PNC Wealth Management.

Other broad gains came as investors were encouraged by an increase in U.S. pending home sales in April. The result surpassed expectations as buyers signed contracts to collect a government tax credit.

Cautious investors hoped that Friday's government jobs report would give the market more direction after several days of back-and-forth swings.

"There's a lack of consensus on the sustainability of the recovery," Dunigan said. "We'll need some positive job numbers in June and we'll need them in July and August as well. We're a little bit in no-man's land at the moment."

The U.S. Dollar Index, reflecting the U.S. currency against a basket of six others, climbed 0.4% recently. However, other safe-haven assets Treasurys and gold were lower. The yield on the 10-year note edged up to 3.30%.

Overseas, Japanese Prime Minister Yukio Hatoyama said he will quit less than nine months after taking office, a change that could fray ties with the U.S. and frustrate other allies seeking greater cooperation and leadership from Tokyo. The Nikkei Stock Average closed 1.1% lower in Tokyo, and the dollar rose against the Japanese yen, following the sudden resignation.

The dollar also strengthened against the euro, which fell to $1.2204. Euro-zone banks placed a record EUR316.4 billion ($387.1 billion) in the European Central Bank's ultra-safe overnight deposit facility, ECB data showed Wednesday.

Also in the euro zone, the Greek government announced long-delayed plans to privatize state-owned companies as part of its attempt to fix the country's public finances and chip away at the public debt. Meanwhile, Germany and France continued to draw apart on regulatory changes Wednesday, when the German cabinet approved an extended ban on certain short-sales of securities.

In the U.S., the first of a series of employment reports was released Wednesday, with outplacement consultancy Challenger, Gray & Christmas saying major U.S. corporations cut 38,810 jobs in May, a 1.3% increase from the 38,326 in job cuts last month. Figures on private-sector employment are due Thursday and the government's nonfarm payrolls report is set to be issued Friday.

Among companies in focus, Amgen jumped 8.8% after the drug maker received U.S. Food and Drug Administration approval for Prolia to treat osteoporosis in postmenopausal women. The approval comes almost two months earlier than expected.

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